According to David Lazenby, Ph. D., the rate of medical professionals’ hand-washing in one hospital rose to nearly 100% when the following sign was posted in waiting areas and patient rooms: “You Have the Right to Ask Any Medical Professional to Wash His or Her Hands Before Treating You.”

When I heard this from Dr. Lazenby at a conference recently, I thought about a sign that could be posted in any financial professional’s office: “You Have the Right to Ask Any Financial Professional to Understand Who You Are Before Making Recommendations.”

One reason doctors need to wash their hands is to protect you, and them, from the last patient’s potential problems. Part of practicing a profession is crafting diagnoses, prescriptions, and advice that is unique to each presenting patient or client. Yet the financial industry has chosen largely to mass produce diagnoses, prescriptions, and advice.

Kathy and Kyle walked into a brokerage office with questions about a seven-figure inheritance from her father. Not knowing where to turn, they chose the national firm that already held her father’s account. The representative asked some questions, then produced a laminated pie chart suggesting how to allocate the cash. Kathy and Kyle asked a few questions of the broker. He answered them. They were going to consider his proposal. As they stood to leave, Kyle reached for the chart. The broker, panicked, grabbed it back, and said, “Oh, no, you can’t take that. I need it for my next client.”

When a financial representative shows the same laminated pie chart to every client, they are not selling professional advice. They are selling a professionally assembled financial widget disguised as advice.

Why, as a society, do we tolerate medical staff who don’t wash their hands and financial staff who assume all clients look alike? Why do we expect professional service but tolerate something less? The next time someone offers you advice but has not clearly understood you and your issues first, then demand better, or find someone else.

On a visit to Ghana, a west African country, in 2004, I noticed how many people wore second hand Western clothes. While others donned beautiful traditional fabrics and garments of their country, it was equally common to see t-shirts, Gap khakis and Levi’s that looked like cast-off Goodwill donations for sale at the market. My hosts told me these were referred to as obruniwaawu, which, literally translated, means, “dead white people’s clothes.”
“Why dead?” I wondered. Before long, an answer dawned on me. Maybe to Ghanians, many of whom don’t have closets, the only reason you would give up your perfectly good clothes would be because you are dead. To them, clothes are something you use until they are no longer useable.
This led me to the idea of how often we, especially Americans, buy new clothes. In planning for cash flow needs, I always ask for a range of annual spending on clothes – an “acceptable” amount, and an ” ideal” amount. I have received answers for both ends ranging from $2,000 to $50,000.
What I have not asked is, how often are they throwing out old clothes? If we throw out old ones when we buy new ones, I would say we have a high “closet velocity.” Correspondingly, the amount of clothes we have on hand at any point in time might be called our “clothing supply.” I am borrowing these terms recklessly from economics concepts of money velocity (the rate at which money changes hands in an economy), and money supply (the amount in circulation at any time).
If you have a low clothing supply and low closet velocity, you are like a Ghanian wearing your small number of clothes until they have holes or stains or are unuseable. If you have a high clothing supply and high closet velocity, you started with lots of clothes, are buying lots of new clothes, but are also giving or throwing away “old,” or more likely, never-worn ones. You may be the Imelda Marcos of clothes.
If you have a low clothing supply and high closet velocity, you have a small, actively-traded closet. New clothes are entering constantly, but getting worn, and old clothes are going out. You have a high clothing budget, and you always look good. If you have a high clothing supply and low closet velocity, you have a large closet of seldom-worn items, with plenty to choose from, but that might be a bit dated.
In her work with Money Habitudes(TM), Dr. Syble Solomon identified six primary attitudes toward money. One of those six is “status.” Anyone with an American puritanical upbringing might see this as a nasty word. Status is something we crave but are supposed to pretend not to. Rather than take such a negative extreme view, Solomon recognizes that money, through status purchases like clothing, can help us make a good impression. It is not prudent to spend lavishly on clothes we will never wear, or to spend more than we can afford for the sake of trendiness, but it also is important to “suit up and show up;” to care about our appearance, looking fresh, not stale.
With her more balanced view in mind, I am going to take a second look at my closet. I don’t plan on being a dead white person anytime soon, but I may find potential obruniwaawu destined for Ghana next year.

Which topic do parents talk the least about with their kids? Sex, drugs, or money? I wondered the answer to this question after hearing a bright young woman who works with teenagers appeal to her middle-aged audience to talk to their kids about sex. Some in the room began to get uncomfortable when she said the s-word. But then, she cited some frightening statistics about pregnancies and STD’s that crossed lines of race, age, class, and school district in my hometown. It seems even 12-year-olds from upper middle class neighborhoods have curiosity, compunction, and dare I say, cravings, we would like to think are reserved for adulthood.

Money and kids have frightening statistics, too, although they may not show up in children until they are adults. The average college freshman still receives too many credit card offers upon matriculation. Who is more likely to have money troubles as an adult: a child who grows up in a household of plenty, or a child who grows up in a household of scarcity? Statistics show it does not matter. What does matter are the spoken, and unspoken, messages the child receives about money.

No matter the wealth status of the household, parents must teach kids to use money responsibly.
Unlike alcohol, drugs, and sex, use of money is not optional. We are forced to use something, every day, which can cause great harm, or great benefit. Small choices we make consistently about money add up, so the habits we develop are critical to success with it. Big choices about money make a big difference, too, so being educated about its power and how to handle it are equally significant.

Sex, drugs, and money talks become easier with time in some families, but in others, even grown children and older parents avoid the topics. Over time, it may be the grown kids approaching the parents about their ability to handle money, and having difficulty. Fifty percent of adults over the age of 80 have some form of mild cognitive impairment. One of the first mental skills to go is how to manage and make decisions about money. Mom or Dad either stops paying the bills, or hands a check to anyone who asks for it. (Loss of sales resistance is another early sign of dementia.) If the family has not established a comfortable conversation about money ahead of time, everyone can be surprised how much damage can be done in a short period. Why not be the parent who tells the kids early on what to do, what to say, and/or who to call if signs of cognitive impairment start to show up? Why not be the adult child who asks for these instructions before it is too late?

The holidays are a time of family gathering, sometimes the only time during the year when families get together. It is a great time to have a family meeting about money. Year-round, though, talk to your kids, or your parents, about the tough stuff that makes children wonder, and adults squirm.

I am a behavioral economist. That means I study how monetary incentives drive decision making and behavior. Until I changed dentists about three years ago (due to a move), the dentist usually spent a few minutes looking around my mouth during my semiannual cleaning and then said, “Nice teeth!”

Now I am on my second dental office where I am told I need a rinse solution, or have three cavities (that I don’t feel yet, when I have only had one cavity before), or, the latest, I need gum grafts so my teeth don’t fall out. (The periodontist just joined the office, and he is the dentist’s dad. You do not have to be a behavioral economist to wonder if there are skewed incentives here.)

I am 46 years old. I walk every day, brush twice a day, floss and take my calcium citrate about three times a week (now I will every day, and I just bought an electric toothbrush). I like something sweet after dinner, but I am not overweight, don’t smoke, don’t drink alcohol or soda, am not chronically ill, and have no family history of periodontal disease. For over 30 years I was told I have “nice teeth,” and now all of a sudden, I don’t?

In the financial industry, as you may be aware, there are powerful incentives for professionals to recommend and upsell products that are not always in the best interest of the consumer. For example, variable annuities tend to pay the highest commission of any financial product, therefore I am not surprised I get asked a lot of questions about them. People are hearing about their many benefits from those who are paid not to understand their downsides.

In response to conflicts of interest like this, an association of financial advisors who choose to be legally bound to “do the right thing” was formed in the 1980s. It is called NAPFA (www.napfa.org). I am a member. We all agree to submit our own work for peer review, to sign a fiduciary oath, and to only accept compensation from clients, never from product vendors. There are approximately 1,000,000 people who call themselves “financial advisors” nationwide, and NAPFA membership is a whopping 2,500. With the amount of product compensation at stake, I am not surprised our group is so small.

My question, though, is, does the dental industry have an association of dental professionals who pledge to really, always, put the best interests of their patients ahead of their own? Who will actually tell a patient they have nice teeth? If that kind of dentist says I need rinses, crowns, grafts, or a lobotomy, fine. I will accept that my carefree dental visit days are over.

I guess with city water fluoridation and better dental habits, dentists don’t get as much routine work anymore, so it’s harder to make a living just filling cavities and doing root canals. One understandable result of this trend is the explosion in cosmetic dentistry. That’s fine by me. “Cosmetic” implies, “not necessary.” But, another result of this trend is the economic incentive for dentists and hygienists (their best sales agents, according to the dental practice blogs I found) to make mountains out of molehills in your mouth. To make the unnecessary seem more necessary. That’s not fine by me. In my research to find the ethical dentists, I found many blogs explaining how to upsell patients. There is even a firm called, “Big Case Marketing” which will help you, Dr. Dentist, sell more “big cases.”

As an uneducated dental services consumer, I have no reliable way to judge who the good guys and gals are. I thought there might be a group of dentists, like NAPFA financial advisers, who decided to band together and promise to keep the patient’s best interests first. If you know of such a group, I would like to know about them. Just in case I have a real cavity.

Recently we had the good fortune to travel overseas with our 18-year-old niece. (See more at travel blog http://hollysholidays.wordpress.com). Aside from being totally cool hanging out with her middle-aged aunt and uncle, I was impressed by her budgeting skills. The budget, however, was not her spending money, but her text messages.

Her mother gave her an allowance of 200 texts for a two-week trip. One morning over breakfast, she volunteered how she was doing on her budget – 100 texts remaining. We were halfway through the trip. By the last day, at the departing airport, I asked how she was doing, and she reported she had 10 texts left.

It seems lately I get more questions about staying disciplined with spending and saving, even from those who have “enough.” Everyone seems to worry from time to time that they might not be spending prudently. If you know even a little about teenagers and texting, you can appreciate how much discipline she exhibited to stay on track. Perhaps there is some wisdom in her accomplishment we all can use.

I believe there were three main components to her texting success:

1) Tracking. At any time, it was easy for her to check her text budget on her phone. For many people, tracking is the only missing component to successfully staying disciplined with spending. It is my belief that credit card companies know this, and that is why you cannot easily obtain spending-by-category information instantaneously on most credit cards. Fortunately, there are mint.com and smartypig.com, two places devoted to tracking spending.

2) Accountability. After the trip, my niece would be accountable to her mother. At 18, that might be sufficient, but for many working adults and pre-retirees, accountability to Mom ended with financial independence from her. Nevertheless, by making her goal public to us at breakfast that morning, she made herself accountable to someone she cared about. If you want to get serious about sticking to a spending plan, who in your life can you enlist to keep you accountable? Ideally this would be someone who will not be judgmental but whose opinion you care about, and will ask you out loud how you are doing on a regular basis. An important aspect of the accountability was also that we all knew it was only for another week. The accountability agreement should last a finite period of time – having it indefinitely isn’t advisable, nor fair, to either one of you.

3) Rewards and Consequences. The benefit my niece received from her breakfast announcement was an instant reward – praise and recognition. Of course we noted her success gleefully with atta-girls and good-hearted amusement. As we get older and have more responsibilities, though, rewards for doing a good job with spending, especially, are tricky. The last thing you want to do is blow the budget with your reward for not spending.

What were my niece’s consequences if she went over her text budget? If you only knew her mother (my sister)! Suffice to say, after 18 years, my niece knew better, but more importantly, she is a conscientious young adult. Once we are free of the bonds of parents (woohoo!), it is up to us to create our own consequences (oh, bummer). If we don’t, they will be created for us.

Every person will have their own successful way to track and build accountability, rewards, and consequences for their money personality. For some, these activities come naturally, while others need guidance. Success depends on understanding early messages we receive about money from parents, teachers, and authority figures, combined with the way we grow up and adapt to both hardships and windfalls. Knowing my niece helps, too.

I did not get a painting gene. By painting, I do not mean the artistic kind, requiring creative talent and the ability to synthesize the world as you see it into a one-of-a-kind colorful expression. I don’t have talent even close to that. No, I mean the kind of painting you use on a wall in your home. One color, applied with a roller and brush. How can I manage to make a simple task so hard? I discovered the answer this week. My financial gene usurped my painting gene. This means I am genetically incapable of putting enough paint on the apparatus, whichever it is. Unconsciously and automatically, I want to use as little paint as possible so I do not have to buy more.

Experienced paint-people know this is a disaster waiting to happen. When you do not use enough paint, your wall becomes a collage of streaks and stripes of varying shades and shapes, instead of an uneventful homogenous surface. To fix it you practically have to call in a professional.

Thank goodness I was not painting a wall. I was only priming our subfloor to prepare for carpet. My husband of 25 years knows better than to put a roller in my hand to paint anything other than something that will be covered up shortly. He got the painting gene.

So we both know (after some trial and error) where I am at my weakest. But that does not mean my financial gene does not serve me well in other venues. The trick has been figuring out when to let it do its thing, and when it needs a leash.

With all of our money habits and attitudes, in fact, there are times when they contribute to our success, and times when they hinder us. Before we recognize that difference, we risk painting a financial collage like my subfloor – varying streaks, stripes, shapes, and shades. Instead, rather, a financial picture could be an uneventful backdrop to simply living a life.

Sometimes it is hard work to discover and admit when we are getting in our own way, but my husband and I have learned that once you map your “talent” genes, you require fewer professionals to fix the mess you made. It costs less overall, and you stay married longer.

“Building wealth is important for your happiness, but focusing on it is not.” So spoke Dr. Robert Biswas-Diener, the “Indiana Jones of positive psychology” at a recent financial conference. A survey using a Life Satisfaction scale showed that people who value love more than money are way happier than people who value money more than love. The latter are, in fact, miserable.

Much of his research has been in desperately poor areas of the world – the slums of Calcutta, for example. Calcuttians say Americans cannot be happy because we have too much money, which gives us too much choice and distractions. People he interviewed in India are, unlike a lot of Americans, happy with themselves and happy with their communities. More specifically, they are happy with their morals and their looks. They are not as happy, however, with their health, their income, and their resources. All of these factors enter into the Life Satisfaction happiness scale.

In linking his research to the financial world, when we ask ourselves, “How much do I need to retire?” “What’s my ‘number?'” or “What’s the best mutual fund for the 21st century?” the answer, therefore, is “It depends.” It depends on what retirement means. It depends on what the number is for. It depends on whether it’s important to always be searching for more, or to simply have enough. It depends on whether we are willing to suspend our societal belief that money buys cures for unhappiness.

The reverse is more likely. Happiness can buy us money. First, in general, happy people are shown to be healthier. (Biochemically, happy people produce more fibrinogen which avoids blood clots and boosts the immune system.) Healthier people have lower medical bills = more money. Second, happy people are shown to get more promotions and pay raises. People in general are more likely to advocate for happy people. Network of advocates = more money. Third, happy people expect that things can get better. These expectations may be optimistic, but are also often realistic. Because these positive expectations are achievable, things often do get better, thus reinforcing the expectation. Setbacks are viewed as only temporary, rather than permanent failures. Living with the expectation that things can get better, as distinct from wallowing in discontent, means a greater sense of current satisfaction and wellbeing. Wait a minute, isn’t this the mental state we have been expecting money to buy for us all along? Perpetual state of satisfaction and wellbeing = priceless. Happiness can buy money, because if you are happy, the money you have goes a lot further.

How do we get to be one of these happy people if we are not one already? We must first understand that happiness is not a destination. It is a process. There are three practices that can contribute to it.

1) Quit making inaccurate predictions of how much happiness we will gain from X or Y. The reason is, the disappointment of something not meeting our happiness prediction hurts far more than the glee of unexpected pleasure feels good. If we enter into more transactions, whether relationship, consumption, or financial, without being in future-happiness-prediction-mode, and accept and enjoy only what is in the present, we are far less likely to experience disappointment and regret.

2) Discretionary income should be spent on experiences not on possessions. Experiences would mean things like moving across town, entering a marriage, or traveling. We tend to adapt to material stuff, forgetting that it is there, but not experiences. Experiences allow us to savor the past because we drag “magical moments” into the present. We don’t remember shoes from ten years ago but we remember our first skydive or a foreign trip. However, even with experiences, we mispredict how happy we will be from a certain expenditure. A trip to the Grand Canyon could bring just as much remembered happiness as a cruise around the world. Eight days in Hawaii could bring the same remembered happiness as fourteen days.

3) Spending money on others brings happiness dividends. Experiences also include things that connect with others. Happy people consistently report being charitable. Does being happy cause them to be charitable, or does being charitable cause them to be happy? Either way, if you want to increase the correlation between lasting happiness and money, ironically, you should connect with others by giving some of it away.

For many of us, by practicing a few more happiness principles, we can begin to build wealth by, paradoxically, not thinking about it so much.